At first blush, a South Texas water district’s10 percent raise to employees who haven’t seen such a thing since 2003 is an ‘it’s about time’ prospect.

When the entity giving out the raise was found in a stateaudit released three months ago to have spent more than it took in since at least 2008, the raises for 10 employees become more significant, even though the estimated cost will be a paltry $25,000.

The audit of theHidalgo County Water Improvement District No. 3 was a scathing review that alleged the district paid more than $106,000 to companies with links to District 3 President and General Manager Othal E. Brand Jr. The district operates without a conflict-of-interest policy. Brand recused himself in votes involving his business interests, according to areport in the McAllen Monitor.

The raises will be covered by a 33 percent increase in water rates, which wasapproved in Julyon the heels of the audit and its allegations.

At the time the increase was approved, Brand said it would raise about $300,000 and cited the audit as the spur for the higher rates. In addition to the pay increase, the district hopes to hire two more administrators, Brand said.

Auditors found the district had “significant weaknesses in the management of its finances and operations.”

It found that assets including land, water rights and easements were sold to cover for revenue deficits, but “it cannot continue to sustain itself through the sale of assets.”

The audit also found fault with the district’s collection procedures, maintenance documentation, and discovered that “the individual who is both the District’s general manager and the president of its board has multiple businesses that provided services to the District in fiscal years 2008 through 2011” without a process to ensure compliance with state laws regulating such arrangements.

Pay for the board members of the district increased 76 percent in 2011, and the audit found no documentation to verify the hours worked in exchange for that pay, a violation of the Texas Water Code.

District employees and board members who handled cash were not bonded, another violation of the code.

The district provides water to the city of McAllen and a number of other entities and individuals.

In its response to the audit, the district claimed that proponents of dissolution of the utility made “politically charged allegations” and pointed out that previous claims by its detractors of missing funds were not sustained by the audit.

The district also maintained that the sale of assets were not made to cover shortfalls and instead relied on an “interim operating loan,” which it repaid.

It cited a number of deficiencies named in the audit that have been corrected, including the money handling, director compensation documentation and conflict of interest concerns.